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A cloudy ray of hope

Sometimes, things can go right. The confrontation of two Chinas across the Taiwan straits is one of the more unstable of the world's relationships. Recently however, in elections and in investment structures behind the scenes sponsored by the European Union, The People's Republic and Taiwan have engaged in a rapprochement.

This is important for three reasons. Firstly, China is under far more economic strain than most people would believe to read the press. There are vast differences between the urban and rural areas of that country, and vast disparities in income and in rates of inflation. There is no private banking sector and few other mechanisms which can bridge the gap. China could be booming and starving at the same time.

Secondly, China is resource dependant. It always has been. Outside of Manchuria, it has very little in the way of raw materials and goods, and requires earnings from its surplus with the west to pay for its deficits with Asia. This weakness often goes unnoticed, but it is a serious problem in a world of declining hydrocarbons and growing military strength. It is in part why China, more than other nations, has put so much emphasis on the international Tokamak project to develop solar-level nuclear power, and why it is about to begin trials in Haifei. With rice and commodities inflating, China needs friends and it needs desperately to stabilise currencies in its region. The alternative is vulnerability to the insanities of the carry trade, inter alia.

Thirdly, by my reckoning, there have been for the past thousand years some seven periods of devastating civil war and break-up in China, which, like Iran, contains over three dozen ethnic, racial and linguistic minorities. If that country, spurred by a crisis in Tibet were to be pushed into a confrontation over its unity, the consequences could be appalling. The most recent period only ended in 1949, after all, and one could see the cultural revolution and the genocides of 1953-69 as in part reactions to it.

So I'm glad that things are a little calmer today in the Taiwan straits.

The picture accompanying this blog is Old Tree and New Bamboo by Xiang Shengmo, who painted whilst Europe was engaged in the thirty years war of the early seventeenth century.

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